It is estimated that around 98 per cent of companies in Malta fall into the category of SMEs, with up to 75 per cent being family owned. Considering Malta’s healthy financial services industry, and the number of Corporate Service Providers (CSPs) in the local economy, the general make-up of business units on the island acts as a major driving force as to how such services are tailored and delivered.
Together with the number of international businesses attracted to Malta, CSPs must be nimble and agile enough to understand the needs of a particular business and the industry they operate in, and tailor advice in a way that addresses those needs while also making financial and viable sense.
Here, we zoom into the services provided by KSi Malta, a local tax, legal, advisory and corporate services firm that also forms part of a global association of leading professional firms, Morison Global, giving it that extra edge and expertise. KSi Malta has been around for 40 years, allowing it to garner decades of practical knowledge, and with its international connections, its expertise does not stop there.
Advisory services
KSi Malta offers a wide range of advisory services, from accounting, corporate finance, corporate restructuring, financial planning and more. Asked whether the firm’s growth in advisory services is tied to the popularity of family-run businesses on the island, Jessica Camilleri, a Manager in KSi’s advisory department, explains that in particular, the company has driven growth in succession advisory services, and that this is indeed intrinsically tied to the number of family-run enterprises in Malta.
She cites a study by big-four firm PwC that surveyed 2,800 family business leaders in 87 territories, which found that 80 per cent value digital transformation, prioritisation of sustainability goals and professional family governance as top priorities and opportunities for growth. It also found that the absolute top priority was effective succession planning.
The survey revealed that two-thirds of those interviewed said they expect to grow, but only one-third admitted to having solid sustainability and digital capabilities.
Jessica Camilleri, Manager - Advisory / Photo by Inigo Taylor
“This is where we see a gap,” Jessica explains, adding that KSi has indeed tailored its services to position itself as a bridge to connect the gap.
She breaks down the company’s strategy when advising an enterprise into three stages: stage 1 – succession planning; stage 2 – transition; and stage 3 – sustained growth.
On stage 1, Jessica shares: “We believe it is much better to be effective now than disruptive later. It is the common perception that succession is almost managed by crisis. Something happens, there is no plan, disruption follows, and this invariably leads to employee frustration, with employee retention becoming hard to maintain.
“So, succession should not be attributed solely to the end of a business life or a business leader’s era, but something that is proactively investigated and planned out.”
How can KSi help in this regard?
Jessica says that this can come in the form of tangibles and intangibles – perhaps setting up fiscal incentives through share and property transfer, tapping into schemes that companies can make use of to facilitate a shift, and on a more practical level, assisting in structural change. What does the succession plan involve in practical terms, from a legal and regulatory standpoint? What are the tax implications? Through KSI’s expertise, the company ensures that the right questions are asked, therefore avoiding unexpected surprises down the line.
Once a plan is formed, the next step is transition planning, where KSi delves into any changes in structure, leadership and direction, while ensuring that the company’s ethos and values are sustained.
Onto the final phase, sustained growth, this is where digitalisation and sustainable elements come into play.
“After setting the regulatory and tax structure, we then ensure there is effective transition through management, HR and the firm’s ethos, and finally, we ensure sustained growth by tapping into opportunities stemming from digitalisation and sustainability goals.”
KSi firmly believes in drawing up a plan before launching any changes, so that both the client and the advisory team can anticipate change, contribute to employee retention and maintain effective continuity.
Succession planning is not just for family businesses, Jessica attests, as it also applies to bigger, non-family run businesses that want to ensure the sustainability and longevity of the business.
Malta’s start-up ecosystem
Isaac Sammut, Business Development Manager / Photo by Inigo Taylor
Over the years, concerted efforts have been made by successive Governments to push Malta to becoming a leading start-up hub in the Mediterranean region. It is not difficult to understand why – start-ups attract investment, bring new and innovative ideas to the economy, and, should they prove successful, create meaningful employment opportunities for a country’s workforce.
Government has launched several incentives and policies tailor made to attracting start-ups, such as the Malta Start-up Residency Programme, in a bid to attract fresh talent to the island.
Asked how the country, and the respective stakeholders that include KSi Malta, are working to retain the value-added generated by Malta’s start-up ecosystem, Business Development Manager Isaac Sammut poses a series of questions on what constitutes an ecosystem, and what role various stakeholders play in curating that system.
“It is not just about attracting start-ups. Do we have the right advisors and service providers in place? The elements that make up an eco-system are very intricate and elaborate.”
Isaac dissects the discussion into two parts: attracting start-ups to Malta, which he believes the Government is excelling at, and consolidating, retaining, and ensuring the sustainability of those start-ups that choose to operate in Malta, which he believes the country is struggling in.
“We have very strong incentives for attracting start-ups, both from a fiscal perspective and a residential perspective, however there is also then the element of how you maintain and keep the talent here on the island.
“There are a number of issues we keep seeing repeated, such as access to finance, and this is not just from a Maltese perspective. Indeed, private equity is basically non-existent in Malta and seriously lags behind in Europe when compared to other continents.
“I think if we really want to continue retaining the value generated by start-ups, we really need to start building on venture capitalists and having private equity. There is also the perception that the more start-ups you have, the more value added will be created. It can be argued that it’s not always the case. In terms of numbers, and the lack of data we have at our disposal, this makes it hard to quantify the value added being generated.
“Eventually, in the coming years, these things will change, we will have more data and we will be in a better position to analyse those start-ups and the value added they are generating.”
On the issue of retention, Isaac stresses that the Government can only do so much, and that the other stakeholders, such as CSPs, practitioners and individuals, have a major part to play.
“Government and service providers need to be pushing in tandem for a holistic and meaningful ecosystem to thrive. Ultimately, on the CSPs part, it’s about ensuring that start-ups have a sustainable business plan, creating a more durable client.
“Our success will be measured on the duration of how long a start-up is incorporated on the island and whether it eventually scales up operations.”
Retain, retain, retain
Indeed, a country that focuses only on attracting new start-ups, and fails to ensure that those who took a chance on a particular jurisdiction are being served adequately, could prove to be counter-productive in the long-term.
Jessica acknowledges that the goal to retain start-ups in Malta must be part of a wider effort and goes on to elaborate on how KSi is playing its part.
“At KSi Malta, when a start-up approaches us, whether they only have an idea at that stage, or whether the organisation is at a more advanced stage, we sit down together, evaluate the options, and come to a solution that works for the client. The initial meeting is set at no cost, and should they choose to take our services forward, we come up with a plan together.”
Here, Jessica explains that the first step is setting up the right structure for a particular start-up based on the individuals behind the company and the industry they operate in. Next, KSi assists in developing an idea further, perhaps in the form of a business plan.
“So, if a start-up founder comes to us with an idea, we can cultivate this idea, formalise a good and viable business case, create reasonable financial projections based on data provided by the client and our own knowledge, and, once the client is comfortable with projections and the level of investment needed, we then move into funding options.”
Indeed, Jessica and the advisory team are well-versed in assisting start-ups that operate in wildly different circumstances. KSi Malta service around 800 clients in total, from large to micro and everything in between. She shares that the advisory department’s client base is made up of start-ups by around 50 per cent, with 70 per cent of those start-ups being foreign.
The firm’s international connections with Morison Global, and the connections this opens up across the globe allow KSi to serve its foreign client base in a valuable and meaningful way.
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